Although many factors have played a role in sending the Industrial average Dow Jones,, S&P 500And Nasdaq Composite For the respective end of the end of 2024 and at the beginning of 2025, nothing was more essential for the investment community than the evolution of Artificial Intelligence (AI).
Giving software and systems the ability to reason and act without the need for human surveillance offers an apparently unlimited growth track. It also opens the door for software and systems led by AI to evolve to learn new tasks without human assistance.
Image source: Getty Images.
In PrizePwC analysts estimate the AI Become a global market addressable of $ 15.7 billion by 2030. If these forecasts are even remotely in the stadium, this means that countless companies involved in AI equipment / infrastructure and the application of the real world will benefit.
No doubt two companies have not been the face of the AI revolution more than the giant of the graphic processing unit (GPU) Nvidia(Nasdaq: NVDA) and data exploration specialist PALANTOUT Technologies(Nasdaq: PLTr). At one point, Nvidia nailed more than 3 billions of dollars of market value and has become a most valid public company in Wall Street. As for Palantir, his actions culminated in mid-February, which is equivalent to a yield of almost 2,000% of the two-year train.
But how the powerful fell.
From the closing bell of April 4, the actions of Nvidia and Palantir had dived 37% respectively and 41% below their top of all time. While some investors could consider this significant descending current as an opportunity to jump, three flagrant opposites suggest that it is not yet time to buy actions from one or the other of the companies.
Over the next 10 years, there is a great probability that AI will transform industries and significantly improve the operational efficiency and margins of eminent public companies. But in the short term, history is definitely not In the corner of AI giants like Nvidia and Palantir.
Dating from the proliferation of the Internet in the mid-1990s, each Big-Big technology ended a bubble event at an early stage. Without fault, investors constantly overestimate the initial adoption rate and the utility at an early stage of Big-Big trends. With expectations that go beyond reality, the bubble eventually bursts.
The simple fact that most companies are far from optimizing their AI solutions or generating a positive performance of their investments in the signals of artificial intelligence that investors have, once again, overestimated early utility and adoption rates.
If there is a silver lining here for Nvidia and Palantant, it is because the two benefit from healthy arrears. Palantant generally signs multi-year contracts with the American government for its Gotham platform, while the overwhelming demand for Hopper and Blackwell GPUs from Nvidia has orders. Even if the AI bubble bursts, as history suggests, sales would immediately drop from one or the other of companies.
Nevertheless, companies at the forefront of Big-Big trends are generally the hardest affected when bubbles burst. If history was to rhyme once again, the shares of Nvidia and Palantir would have much more fall.
Image source: Getty Images.
Although most investors are probably tired to hear about President Donald Trump’s pricing policy, this is the second big reason for the investors would be wise to keep their distances from Nvidia and Palantant technologies.
On April 2, a Trump day called the “Liberation Day”, he introduced a global tariff of 10%, as well as a burst of reciprocal prices on countries that have historically held commercial imbalances with the United States, while President Trump is to strengthen this approach could have prices, protect American jobs and return manufacturing to the United States, this approach could have consequences could have consequences. negative.
In December, four economists from the New York Federal Reserve in Liberty Street Economics published a report that examined the performance of actions exposed to Trump porcelain prices in 2018-2019. Unsurprisingly, the companies exhibited at China prices have made it possible to make less efforts on the days that these pricing announcements were made. But what you may not realize is that these sub-performative companies have also seen their sales, their profits, their employment and their labor productivity from 2019 to 2021.
Even if nvidia no matter of China, he has contractual agreements in place with the giant of the manufacture of fleas Manufacture of Taiwan semiconductors. Countries that are essential to the semiconductor industry have been affected by significant prices, which could have a negative impact on the margins of Nvidia, as well as the harmful demand for its products on these foreign markets.
While Palantir does not have to worry about the direct implications of the prices – it offers platforms based on AI and focusing on learning through learning, it is possible that the worsening of trade relations caused by prices can reduce demand for company solutions outside the United States
The final of three reasons that explains why NVIDIA and Palantir technologies are not worth buying, is their respective assessments.
To indicate the evidence, the value is itself subjective. What an investor finds expensive could be considered a good deal by another. Nevertheless, the story has left little margin for error with one or the other of companies.
For example, when Palantant reached his highest fence of $ 124.62 per share on February 18, his price / sales ratio (P / S) oscillated around 100! To put this figure in context, other leading companies of the following trends, such as Amazon,, MicrosoftAnd Cisco systems Before the DOT-COM bubble, reached a peak with P / S reports ranging from 31 to 43. Even the P / S ratio of Nvidia exceeded 42 last summer. Despite the loss of 41% of its value, the P / S of Palabuting ratio always oscillates around 60 years, which is a level that history shows in a conclusive manner is not durable.
It should be noted that, although Nvidia’s P / S ratio is more than 18 years old, it is still considerably more expensive than its “magnificent” peers, compared to sales.
The expansion of this assessment concern is the reality that the stock market is historically expensive. He entered in 2025 with the third highest price / profit (P / E) ratio (P / E) when it was tested in January 1871. Using correlations as a guide, the previous five times, the S / E Shiller exceeded 30 during a final bull market to declins of 20% (or more) in the Dow, S&P 500 and / or Nasdaq Composite.
When the stock market returns, companies with premium evaluations tend to be hardly affected, as you probably notice it with Nvidia and Palantir. However, the stock market is not about to be inexpensive, despite the recent fall in stocks. With more decline projected by the S / E SHILLER ratio, NVIDIA and PALANTOUT actions should be trained lower.
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John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of Motley Fool’s. Sean Williams has positions in Amazon. The Motley Fool has positions and recommends Amazon, Cisco Systems, Microsoft, Nvidia, Palantant Technologies and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: Long January 2026 Calls $ 395 on Microsoft and Court January 2026 405 $ calls Microsoft. The Word’s madman has a Disclosure policy.
